Skip to main content

Lack of domestic battery production could short German automakers’ EV plans

BMW X5 eDrive concept front three quarter plugged in
As automakers ramp up efforts to produce more electric and hybrid vehicles in their lineups for the near future, this ultimately has increased the demand for battery production. However, analysts fear some companies could struggle with this demand, specifically German car companies — and that is because none of them currently build and produce their own batteries. Instead, they have to rely on third-party supplies, mainly from Asia. This has German car companies in a bind, not just with themselves, but the German government as well.

According to The Verge,  Germany’s automobile industry is incapable of producing its own batteries. That’s because none of the automakers and parts suppliers in Deutschland prepared for this electric vehicle and hybrid boom. Instead, they’re relying on Chinese, Japanese, and Korean battery production, which has German chancellor, Angela Merkel, frustrated and worried about Germany’s economy.

Merkel openly pressured German automakers and expressed discomfort with how the car companies — the biggest commercial sector for the country’s whole economy — are relying on Asian companies for its batteries. Ultimately, Merkel and her government simply don’t like the idea that its most crucial industry is depending on foreign suppliers — especially since they’re not European companies. Further, some of the automakers have already run into complications with negotiating public contracts.

Up until 2015, Daimler, the parent company of Mercedes-Benz, had a battery cell production facility in Saxony. The plan was to win contracts from its fellow German competitors and to build the business together and make it profitable. However, that fell through, particularly since at the time, none of the German automakers had an attractive hybrid and electric vehicles to sell, so the project was canned for failing as a business plan.

This apparently led to a ripple effect where other suppliers and companies, like Bosch and Continental, also pulled back on any plans to produce battery cells because of a lack of confidence in the business model. This lack of confidence has the entire German auto industry apprehensive about getting into battery production because of the high costs associated with building the facilities, and even producing the batteries and further developing the technology.

For these reasons, the companies said that relying on the Asian companies currently is not an issue and it doesn’t make sense for German automakers or suppliers to build batteries with today’s technology just yet.

The situation is also partially caused by Asian companies having more expertise in the technology of the lithium-ion cell business, due to its superiority in the consumer electronics industry. It’s also further likely that the Asian companies favor their domestic automaker partners, giving them the advantage in electric and hybrid vehicles.

But as electric vehicle and hybrid demand continues to grow and German automakers keep promising to build more, analysts say the need for a battery production facility on home turf will continue to rise.

Editors' Recommendations

Chris Chin
Former Digital Trends Contributor
Since picking up his first MicroMachine, Chris Chin knew his passion for automobiles was embedded into his soul. Based in…
Sony could enter EV market with its Vision-S vehicles
sony could enter ev market with its vision s vehicles evs

It was precisely 12 months ago at CES that Sony unveiled its Vision-S 01 concept electric vehicle (EV) design. That’s right, Sony, the company more famous for TVs, cameras, and consoles than cutting-edge cars.

Our excitement at the sedan’s dazzling design was tempered by the realization that the Japanese company would probably never actually manufacture the automobile.

Read more
Toyota announces site for its first U.S. battery plant
2019 Toyota Corolla hatchback

Toyota is doubling down on its electric vehicle ambitions with the building of a $1.3 billion battery production plant in North Carolina, its first such facility in the U.S.

The Japanese automaker announced the plan on Monday, December 6, revealing that it will build the plant in the Greensboro-Randolph area about 80 miles northeast of Charlotte.

Read more
Next-generation batteries could use material derived from trees
Tree scene photo taken with the OnePlus 9 Pro

A team of scientists has found a way to make use of an unusual material in next-generation batteries: Wood. The team from Brown University has developed a tree-derived material to be used in solid-state batteries, which are safer and less environmentally damaging than current batteries.

Current generation lithium-ion batteries, like those used in phones, computers, and electronic vehicles, use volatile liquids as electrolytes. These electrolytes conduct lithium ions between the positive and negative electrodes of a battery. Liquid electrolytes do this job well, but they are toxic and can be dangerous. If the battery experiences a short circuit, for example, the liquid can combust and the battery can catch fire. This isn't usually a problem in everyday use, but it has led to the recall of some batteries which have been incorrectly manufactured.

Read more